The term digital transformation recently entered the everyday lexicon of business and beyond. But what does a digital transformation look like?

Bain & Company defines digital transformation as integrating technologies into an organization’s strategy and operations. Such a transformation is not a one time initiative, but rather a continual effort to merge the digital and physical worlds of the organization to improve operations, customer experiences and innovation.

Start with your priorities

Every digital transformation is unique and will vary between industries, companies and business units. As with every major project, when embarking on a journey it is essential to define your goals and strategic initiatives first.

The biggest mistake a company can make is to apply technology solutions gratuitously. Where can technology bolster existing business, help solve problems or create new revenue streams?

It's imperative that stakeholders confer on these points prior to looking into specific technologies or pulling in vendors or consultants.

All businesses can benefit from some degree of digital transformation. As Bain puts it: "Managers begin by determining whether they must prepare for digital disruption or digital transformation."

All kinds of technologies - from IoT to AI - can make a substantial impact when added to your transformation toolbox. In this post, we will focus on building the foundation for a digital transformation with cloud computing.

Cloud computing

One of the primary building blocks of transformation is potentially cloud computing. Cloud computing is the delivery of storage, services and databases over the internet. Until recent years, most companies housed data in servers on premise that their IT departments monitored, managed and scaled. In order to do this on a large scale, it takes significant investment in capital (hardware) and people.

Moving data to a cloud requires partnering with a cloud services provider. The three dominant players in the space are Amazon (AWS), Microsoft (Azure) and Google Cloud Platform. However, dozens of other technology companies and niche providers offer cloud computing services.

Companies that provide cloud services offer their server infrastructure for storage as well as a myriad of auxiliary computing services. The provider charges based on usage similar to a utility bill.

This allows for an unprecedented level of flexibility especially for companies growing quickly. Instead of buying and setting up new servers for additional capacity in a traditional model, the company can simply pay their cloud service provider more. Conversely, if less capacity is utilized, the cloud customer doesn't waste resources.

There is no one-size-fits- all approach to cloud computing. Many large organizations will take a hybrid approach and migrate some applications to the cloud, while keeping other legacy programs or sensitive data housed in on premise servers.

A strategic cloud services partner can help identify the optimal programs to migrate. They can also make program recommendations for the three primary types of cloud services: platform as a service (PaaS), software as a service (SaaS) and infrastructure as a service (IaaS).

Savings and increased profitability

According to a study by Rackspace, 88% of companies that utilize cloud computing can point to immediate cost savings and 56% report increased profits as a result of using the cloud. Most companies realize cost savings through capital, labor and productivity.

Increased profits typically derive from lowering operating costs but also improving customer experiences, sharpening business intelligence as well as creating room for innovation.

App modernization

Organizations undergo digital transformations in order to modernize, and one of the most cost effective and efficient ways to elevate IT resources is through app modernization.

Many companies will hire outside resources to manage app modernization projects, but this can also be accomplished with a competent DevOps team. App modernization entails taking existing applications and enhancing them to meet current needs.

Applications can undergo modernization without moving to the cloud, however the cloud allows for more flexibility when it comes to updates. It also allows for more seamless app integration.

Apps are typically modernized through re-platforming, simplification or feature extension. This kind of work helps tp transform a business without reinventing the wheel. It also minimizes disruption or downtime making it one of the most logical first steps in the process.

Big data and business intelligence

Operating in the cloud presents an enormous amount of potential to take advantage of disruptive technologies. The suite of technologies driving digital transformations largely center around one thing: business intelligence (BI).

In today's world, data is king. However, what use is data if you can't make sense of it? Data-driven organizations collect data through various systems and touchpoints then automate analysis to present actionable insights.

Forbes defines BI as "a framework that combines technology, processes and people for enabling faster, better-informed business decisions".

Essentially, BI enhances smart decision-making velocity. Many companies primarily use BI for tailoring sales and marketing initiatives by gaining a more precise understanding of their customer and target base.

By utilizing cloud services, companies can select from any number of SaaS providers, which can build effective, user friendly dashboards for various business functions. For small to mid-sized businesses without an internal IT powerhouse, the cloud can help level the playing field for business intelligence.

Insights gained from enhanced BI can help pinpoint use cases for other technologies that can be used to modernize and get ahead of the competition. The worst mistake a company can make in this process is by investing in arbitrary technology solutions for the sake of doing so.

Taking these first steps through cloud computing and BI will ensure a strategic and successful digital transformation for your organization.

Photo by Alex Machado on Unsplash.